Mahindra & Mahindra (M&M) on Saturday said its board has approved the demerger of Mahindra Two Wheelers Ltd's two-wheeler undertaking, which manufactures and sells two wheelers.

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"The company's board approved a scheme of arrangement...Which envisages demerger of the two wheeler undertaking of MTWL and transfer and vesting thereof as a going concern into the company," M&M said in a regulatory filing.

All assets and liabilities of Mahindra Two Wheelers Ltd (MTWL) pertaining to the two wheeler undertaking to be transferred to M&M, it added.

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"The proposed demerger in line with the strategy of focusing on niche premium two-wheeler segment would enable the two-wheeler undertaking to benefit from the company's design and development and sourcing capabilities," it said.

The demerger would also enable the demerged entity to enhance focus on the spares business, it added.

M&M has presence in many segments of the automotive industry -- passenger and utility vehicles, commercial vehicles including three wheelers and trucks and buses.

"The scheme will also enable the company and MTWL achieve and fulfill their objectives more efficiently and in a cost-effective manner," the filing said.